Decentralization In Developing Nations

What is decentralization? Transfer of authority from central to local Transfer of authority from central to local Encompasses a variety of concepts which must be carefully analyzed in any particular country before application. Encompasses a variety of concepts which must be carefully analyzed in any particular country before application. Each country has its own “rhythm” of change Each country has its own “rhythm” of change This analysis should include the various types of decentralization This analysis should include the various types of decentralization

What types of decentralization? Or In what ways does decentralization occur? ?

Types of Decentralization Political: Political: Aims to give citizens or their elected representatives more power in public decision- making. Advocates assume that decisions made with greater participation will be better informed and more relevant to diverse interests in society than those made only by national political authorities.

Types continued.. Administrative Decentralization – Administrative Decentralization – Seeks to redistribute authority and financial resources among different levels of government. The 3 forms are: Deconcentration, Delegation, and Devolution

Types continued.. Fiscal Decentralization – Fiscal Decentralization – Giving local governments and private organizations revenues to carry out service effectively. Forms include: a) self-financing; b) expansion of local revenues; c) intergovernmental transfers; d) authorization of municipal borrowing

Types continued.. Privatization – Privatization – Government and private sector cooperate to provide services or infrastructure Deregulation – Deregulation – Reduces legal constraints on private participation or allows competition among private suppliers for services that in the past were provided by the government or regulated monopolies

What are some drawbacks or potential dangers of decentralization? ?

Argument against decentralization Makes stabilization policies more difficult to implement, or even destabilization of public expenditures and debt Makes stabilization policies more difficult to implement, or even destabilization of public expenditures and debt Offloading of fiscal imbalances by central governments to local governments. Strong association between decentralization and fiscal imbalances at lower levels Offloading of fiscal imbalances by central governments to local governments. Strong association between decentralization and fiscal imbalances at lower levels Possibility that decentralization retards economic growth Possibility that decentralization retards economic growth

Argument for decentralization Efficiency: Efficiency: Decisions about public expenditure on a closer level of government are more responsive and reflect local demand more so than remote gov’t. Also, improvement of competitiveness of gov’t and enhances innovation – more likely to act to satisfy the wishes of citizens.

Argument for decentralization Political – Political – Decentralization an essential part of democratization as autocratic central regimes are replaced by elected governments

Rationale for “balanced” Decentralization – not “either-or” Not all functions can or should be financed and managed in decentralized way Not all functions can or should be financed and managed in decentralized way If national gov’t delegates responsibilities, they usually need to retain policy and supervisory roles If national gov’t delegates responsibilities, they usually need to retain policy and supervisory roles National gov’t creates and maintains “enabling conditions” that allow local responsibility National gov’t creates and maintains “enabling conditions” that allow local responsibility Decentralization depends on training and coordination of local gov’t, private enterprises, and local NGO’s in planning, financing, and management Decentralization depends on training and coordination of local gov’t, private enterprises, and local NGO’s in planning, financing, and management